Thomas Corcoran: People looking for value returns for the portfolio as compared to high-flying dot.coms.

Thomas Carr: It will take a perception that the yield profile of the REITs compares favorably to the yields in other sectors of the stock market. For that to happen, there'll need to be a dramatically different perception of the opportunity in NASDAQ stocks than exists today. How long will it take for NASDAQ valuations to come back to earth?

Tom Hefner: It's happening. I think the worst may be behind us. The NASDAQ is in correction territory, and people are now talking about fundamentals. They're talking about burn rates on the dot.com companies and how much cash they have. So the herd is at least starting to turn its head.

John Bucksbaum: A significant change in the technology markets and a concern that investors' money needs to be in more secure investments that pay a decent dividend.

Irving Lingo: The same thing it will take for investors to come back to any of the "Old Economy" stocks - seeing valuations of technology-related shares return to something more rational. The average investor's [and perhaps the institutional investor's] return expectations are a bit unrealistic.

Steve Sterrett: There are two things. First - the tech bubble has to burst. A lot of the tech valuations are driven by six to 10 high-quality companies, and the bubble needs to burst at the bottom end of the tech spectrum. Second - REITs need to keep demonstrating good earnings growth.

NREI: Equity capital is currently scarce in the REIT world. Do you think there are any other reasons for that scarcity other than high-flying tech stocks attract all the money?

Robert Peddicord: I don't think there are any other reasons other than investors' attraction to high-tech, and I think that is going to change over time.

Carr: Fundamentally, no. People in the real estate sector are looking for other reasons for the poor performance of the stocks, but I don't think they are there.

Hefner: I think many are saying that we are all deal junkies and all we care about is growth. That's bunk. I own more shares than most investors, why would I trash my own stock? We really love earnings per share growth. As the whole industry proves itself to be self-funding and growing earnings per share in the double digits, this growth misconception will come home to roost.

Corcoran: The real estate market has historically been a boom/bust business and I believe a lot of people are waiting around for the bust. However, I don't think that there is going to be a bust. People are not in financial trouble and haven't borrowed too much money.

Sterrett: Wall Street still treats REITs as separate class citizens. Many people still look at REITs as just a collection of properties rather than a dynamic business.

NREI: How do you think Wall Street perceives REITs' investment attractiveness and real estate as an asset class?

Peddicord: I don't think we need to improve our standing in the eyes of Wall Street. We have a pretty good reputation. Wall Street just doesn't think that REITs are the right play for now, which is baffling since fundamentals are so strong. In the end, I don't think it is a matter of REITs improving their standing. The bear market is a result of market conditions.

Carr: Wall Street, taken broadly, views REITs as undisciplined consumers of capital who are far from the leading edge of technology. I would say that both of those comments are accurate when you look at the performance of the sector historically.

Corcoran: I am not certain there is a negative collective view on Wall Street, other than those waiting for the bust that is not going to happen. I think they are wrong about that.

Bucksbaum: I am not sure that Wall Street recognizes real estate as an asset class.

Lingo: It's hard to answer. REITs are still judged as a low-beta investment exhibiting bond-like yields but with a capital appreciation 'kicker.' That evaluation is essentially accurate.

Sterrett: Real estate is different to a degree than other businesses, but the reality is that we should not be viewed as an entirely separate asset class. Part of the problem is that we need to be seen less as a separate asset class and more as corporations and businesses. Earnings growth during the past five years for REITs has not been dissimilar to the earnings growth of the S&P 500, and REITs clearly have less volatility in their earnings streams.

NREI: What can REITs do to improve their standing with Wall Street and the rest of the investment community?

Carr: They have to do three things: First - perform and hit their numbers. Second - be disciplined with regard to both their use of capital and their own core capabilities. Third - exert vision beyond simply owning buildings. They have to be able to define their business in the context of their customers' needs.

Hefner: Show the ability to consistently grow earnings per share in double digits. They have to show multiple sources of income so they can grow through good andbad times.

Corcoran: Stay focused on their core basis, keep conservative balance sheets, and look for ways to create shareholder value through other vehicles such as joint ventures and the buy back of stock while maintaining a conservative balance sheet.

Bucksbaum: Continue to post good earnings. No monkey business with reporting numbers. Get out and sell your story.

Sterrett: Interject ourselves into the mainstream. Perhaps inclusion in the S&P 500 would help - anything that would convey the message that we are businesses, not just collections of properties.

Mitchell Hersh: REITs need to maintain their focus and continue to enhance the quality of their earnings.

NREI: What has your company done during this REIT bear market?

Peddicord: We have been preparing for a better market. We grew so fast that we haven't tapped out our internal growth. We have been implementing and streamlining processes. We have also turned to other avenues for growth, developing amenities for our tenants as well as additional services outside of our tenant base for when the REIT Modernization Act goes into effect ... when we will be able to sell our expertise in the core disciplines - managing, leasing, operating - to other tenants and owners.

Carr: We have trimmed $500 million of non-strategic assets over the past 14 months. We've announced a strategic merger with our executive suites business, which will leave us a 20% owner of the largest executive suites business in the world. We also have dramatically grown our multi-lease customer relationships - they now represent around 30% of our entire portfolio. We have participated in technology alliances with Broadband and DukeSolutions. We have embarked upon a program - Project Excellence - to increase internal efficiency and to improve the quality and timeliness of our internal reporting systems. This period has left us a dramatically different and dramatically better company than we were two years ago.

Hefner: We have been sticking to our knitting and looking for additional sources of revenue. We've invested in Broadband and a telephone company. We have expanded our service operations and done some build-to-suit for clients. We have stayed focused on the things that we can do something about. We also are trying to communicate that we love earnings per share, that we have an unparalleled growth story in that respect, and that we are self-reliant for capital.

Corcoran: We have completed the upgrade, renovation and re-branding of hotel assets purchased over the past couple of years. We've maintained the existing hotels with capital reserve monies to keep the hotels in competitive position and extended the maturities of debt with more fixed-rate debt. We also purchased more than $100 million of our stock.

Bucksbaum: We have continued to post great numbers and make acquisitions when appropriate.

Hersh: We've continued to act as smart real estate operators. As acquisition opportunities have slowed, we've been able to capitalize on our relationships with existing tenants, and that has resulted in numerous opportunities for build-to-suit, significantly preleased developments, lease expansions and acquisitions. We've also focused on unearthing value via joint ventures and shared tenant service opportunities, such as the telecommunications venture BroadBand Office.

Lingo: Bradley has one of the lowest payout ratios in the sector, so we have retained meaningful amounts of cash. We have been active sellers of non-core assets and reinvested the proceeds into higher-yielding development and re-development opportunities. Most of all, we have reduced our capital outlays to account for the difficult state of the REIT capital markets.

NREI: Where do you see opportunity at this stage of the cycle, given current REIT stock valuations?

Peddicord: Opportunity is in our own portfolio - internal growth. Not being happy with 95% occupancy. Looking at other avenues of how we lease. We have gone through our portfolio and built out select space like our plug-and-play suites (spec suite 1,000 to 2,500 feet), incubator space (targeting start-up and next phase), and quick-lease space, [using] prenegotiated short-lease documents that allow tenants to get in quickly.

Carr: The actions that the company has taken over the past two years are exactly what we should be doing going forward. We will be investing in our core businesses, new build-to-suit development innovation and our people - our most important strategic asset.

Hersh: I believe there remains substantial opportunity for REITs, but only for companies that have considerable financial strength and flexibility. We have been building up our land inventory in anticipation of today's tight conditions, and can develop over 10 million additional sq. ft. of office space. Redevelopment and the repositioning of properties also are appealing in certain markets and offer development-like yields with less risk. In acquisitions, capital-constrained companies may need to liquidate assets or even their entire portfolios. This presents a great opportunity for companies like Mack-Cali with strong balance sheets.

Lingo: We see opportunity in selectively investing in new development projects and in the redevelopment of existing under-performing properties. Given the limited availability of capital, superior returns are essential. This is not a good time to be investing in stabilized assets.

Sterrett: We are working to leverage our existing platform of properties. The mall industry has never seen a portfolio of our size and quality, and to take advantage of that we've launched the Simon brand initiative. We also are spending a lot of time on technology, which includes some e-commerce initiatives in the mall environment.

NREI: What has been your biggest challenge during this time?

Peddicord: Staying disciplined and not pursuing borderline opportunities, even though we have capacity.

Carr: Preventing ourselves from being negatively influenced by Wall Street's myopia. We understand that the best way to perform for our shareholders and motivate our employees is to keep our eye on the ball.

Hefner: Keeping our people focused on things that they can do something about.

Corcoran: Behaving ourselves and not overreacting and doing something stupid just because the market is out of favor with real estate.

Bucksbaum: Keeping the existing investors happy given the lackluster performance of the stock during such a strong business cycle.

Lingo: Managing investor expectations to the lower growth rates that are a byproduct of reduced capital flows.

NREI: What would you do with capital if it started flowing back to the REIT market?

Peddicord: When we have capital, we are going to go back to our markets and create synergies by buying buildings close to our other buildings. We want to be dominant players in submarkets that we have already evaluated and believe are good targets.

Carr: I would ignore it.

Hefner: I'm not sure we would do anything differently. I think things would be business as usual.

Corcoran: Continue the original strategy of buying undervalued hotels that can be rebranded and improved, creating value from these actions.

Bucksbaum: Nothing different than we are currently doing.

Lingo: One of the greatest fears of investors is that there will be a rush to issue equity should capital return to our sector. We need to take this concern into account, while acknowledging that investing in solid, well-conceived real estate projects makes sense, so long as we maintain a balanced, conservative capital structure.

NREI: What kind of things do you think provide the greatest opportunity to leverage technology in your company?

Peddicord: At this point, no one is quite sure exactly what the tenant wants. So, we believe the virtual concierge is a great concept - provide whatever services the tenants want from their desktops. We have preferred providers for discounts on basic services and, at some point, we will go on to other levels of service.

Hefner: The greatest opportunity has been in the telephone business. We can aggregate a lot of clients in that area. The second arena for profit potential is the utility business - aggregating and passing the savings on to clients and us. We are also exploring different portal opportunities. We are not sure how that profits the company yet, but we are internalizing these and learning how we are going to facilitate cross-selling between clients.

Corcoran: Working with our brand partners to provide access to the hotel room along with several B-to-B opportunities.

Lingo: I think improvements in technology bring greater opportunities to manage and lease our portfolio by providing operating cost data at the property level, tenant information such as sales levels, lease tracking, etc. Technology also helps us evaluate new investment opportunities and better track ongoing development and redevelopment projects.

NREI: Crystal ball time. The REIT market has matured since the early 1990s. Where do you think it will go from here? How do you think the REIT world will change over the next five years?

Peddicord: I see added services becoming a bigger form of revenue for companies, along with more preferred providers in technology. This isn't going to replace rent revenue, of course, but service revenue will grow.

Hefner: The companies that are successful will continue to separate themselves. There is not enough separation today. Many companies will be out of business by self-liquidating or de-REITing, and there will be fewer players with more muscle.

Corcoran: The REIT market should be stronger and larger with more moderate growth, but trading at higher FFO (funds from operations) multiples than today. The value play for our industry, if it happens, and I believe that it will happen, should sustain a steady growth strategy for the industry.

Bucksbaum: There should be consolidation.

Hersh: Consolidation will increase and create a limited number of real estate powerhouses that dominate the industry.

Lingo: I think the public ownership of real estate will continue to expand, although the number of REITs will decrease. Public ownership of real estate via the REIT vehicle makes sense, and over time it will clearly be superior to the private model.

Sterrett: I think it is clear that the top-tier REITs will find ways to develop revenue streams other than the leasing of space. I suspect there will be fewer but much larger REITs. Technology will play a much bigger role in real estate going forward.

NREI: What effect will the REIT Modernization Act have on REITs and their performance? Will your company approach the business differently when it takes effect next year?

Hefner: We are a building company with a lot of build-to-suit experience. So, we are already doing the kind of things that other REITs are planning on doing. They haven't been doing their own construction, management and leasing, so they are behind. They may have the freedom to do these things, but may not have the skill. We are not, however, going to change the risk profile of the company.

Corcoran: The Act will be very helpful to FelCor because we can acquire the leases inside the REIT and provide a direct relationship with more flexibility with the hotel management companies. There also may be the opportunity to look at other businesses that are related to the hotel business so long as it does not involve the day-to-day management.

Bucksbaum: GGP will not change dramatically after the Act.

Lingo: What I do think is clear is that investors don't want to see the non-taxable subsidiary creating a significant change in the risk profile or operating profile of the company. I think certain types of real estate, such as malls and office, may derive some benefit through their non-taxable REIT subsidiaries. For other property types, such as the strip shopping centers, the potential impact is less clear.

NREI: Many REITs seem like they are itching to get into other service businesses like telecom and other high-tech services. Do you think this is a good or bad (or just necessary) thing?

Peddicord: It is just a smart business decision. People are making a lot of money from our tenants. In our case, we have 65,000 employees moving in and out of our buildings every day. That is a large captive audience and it only makes sense to capitalize on that.

Corcoran: As long as it is a part of providing the service to their customer and is truly state-of-the-art and competitive, then I think there is a place for providing services.

Bucksbaum: I think it is good and it is necessary.

Hersh: This is not only good for tenants and owners - it's absolutely necessary. To be a full-service real estate company, firms must go beyond the traditional services of building, leasing and managing buildings. Access to telecom and other high-tech services is an amenity today that will quickly become a commodity tomorrow.

Lingo: I think significantly changing the risk or operating profile of a company is not a good thing. It's not what the investors bargained for when they invested in these companies.

NREI: If you were to whisper something in a would-be REIT investor's ears, what would you say?

Hefner: Read your scorecards better and give us credit for what we have done. We are 6 years old and we have an incredible company. Why aren't you giving us credit for it?

Bucksbaum: Believe in the companies who have proven themselves over and over in the real estate business. Look for those who have shown they know how to make money.

Sterrett: REITs are living, breathing, operating businesses, so pay attention to them. In the long term, a company that can grow earnings by 8% to 9%, and pay out an 8% to 9% dividend with relatively low volatility, is a good investment. The dollars that are flowing into technology are about companies that have tech ideas and are out seeking customers. REITs already have the customers. Don't underestimate our ability to leverage our customer base and be players in the high-tech arena.

Lingo: There is risk in this market ... a diversified portfolio with some REIT exposure is a good way to earn solid returns while mitigating market risk.